The Federal Housing Finance Agency late this week released the official results of its first REO initiative to transfer the management of 1,760 Fannie Mae REO properties to private investors.

Initially billed as an REO bulk sale back in February, the offering turned into a ‘structured transaction’ where the three winning bidders purchased an initial 10% interest in each REO pool – making them an equity partner with Fannie Mae.

Each bidder’s equity share will increase to 50% once they reach their performance threshold.

Some potential investors wanted to pay cash for the REO pools and take title to the properties right away but FHFA nixed the idea.

A handful of institutional buyers were put off because Fannie required bidders to reveal to the agency all of their investors.

One source told National Mortgage News that they expect the GSE regulator will make improvements to the process before the second REO transaction is rolled out.

“The Federal Housing Finance Agency is encouraged by the results of Fannie Mae’s first REO pilot transaction and remains committed to pursuing efforts that build upon the success of this initiative,” the agency said Friday in a press statement.